Strategic sourcing is an institutional procurement process that continuously improves and re-evaluates the purchasing activities of a company. In a production environment, it is often considered one component of supply chain management. Strategic sourcing techniques are also applied to nontraditional areas such as services or capital. The term "strategic sourcing" was popularized through work with a variety of blue chip companies by a number of consulting firms in the late 80s and early 90s. This methodology has become the norm for procurement departments in large, sophisticated companies. The steps in a strategic sourcing process were defined, in 1994, as Assessment of a company's current spending (what is bought, where, at what prices?). Assessment of the supply market (who offers what?). Total cost analyses (how much does it cost to provide those goods or services?). Identification of suitable suppliers. Development of a sourcing strategy (where to purchase, considering demand and supply situations, while minimizing risk and costs). Negotiation with suppliers (products, service levels, prices, geographical coverage, Payment Terms, etc.). Implementation of new supply structure. Track results and restart assessment (Continuous cycle) A slimmed down strategic sourcing process was defined, in 2012, as Data collection and spend analysis Market Research The RFx process (also known as go-to-market) Negotiations Contracting Implementation and continuous improvement Note that while the modernized process combines the market assessment and cost analyses steps of the older model into a single "market research" step, and the supplier identification and sourcing strategy development steps into a single "go-to-market" step, negotiation has split into "negotiation" and "contracting". This is due to the heightened importance of market intelligence in modern strategic sourcing, and its ability to deliver value by improving both pricing and contract terms when leveraged against the identified suppliers. Note also that, while both descriptions of the sourcing process are accurate to some extent, there is no standard set of steps and procedures. As strategic sourcing is put in place and practiced over time, many large, sophisticated organizations will modify the process to better meet their individual corporate needs. Outsourcing a business practice to another company may also be incorporated into a sourcing strategy for services. This may involve the transfer of staff and assets to the outsource company. Due to the strategic and complex nature of outsourcing, many organizations such as Procter & Gamble, Microsoft and McDonald's have created what is referred to as Vested Outsourcing agreements to help create highly collaborative win-win business relationships. Researchers at the University of Tennessee provide guidance on how to create Vested Outsourcing agreements in their book Vested Outsourcing: Five Rules that will Transform Ou